In February this year, more than 26 million Europeans were without a job – an unemployment rate of 12%. The most pressing concern is the situation of our young people: around 5.7 million of them are without work.

In Greece, youth unemployment stands at almost 60%, in Spain 56%.

Socially, these trends are unsustainable. Morally, they are unacceptable.

Unemployment brings hardship not only to the people concerned and their families. It also does terrible damage to our economy and our society. Unemployment is a waste of human talent; it undermines our dignity and sense of purpose.

The economic and financial crisis is, of course, one of the main causes of today's unemployment in Europe. As long as growth remains low, jobs will remain scarce. We must mobilise all our resources to offer real solutions to our young people, otherwise we face the risk of a lost generation.

This is why, under the leadership of my colleague, Laszlo Andor, the Commission proposed a Youth Guarantee. I am pleased that, following your resolution, the Employment and Social Affairs Council of 28 February reached an agreement on the Recommendation on Youth Guarantees. This paves the way for immediate action by Member States to help our young people.

But to address the endemic issue of youth unemployment, education and training play a central role. Some might question the relevance of education – always a long term project which bears fruit over time – at a moment when people want quick remedies for acute ailments.

But I am convinced that education holds the key to both our immediate response and the long-term challenges: by helping people to find work in the short term, and improving their employability for the long term. Let us be clear: public education remains one of our best tools for fighting social injustice and inequality.

This is the agenda I am pursuing as the Commissioner for education and training: we must do a better job of equipping our young people with the right mix of knowledge and skills.

Indeed, in spite of high unemployment, the number of job vacancies is increasing. There are currently more than two million unfilled vacancies in Europe. This paradox is not acceptable.

It is a paradox that reveals, above all, the mismatch between the skills provided and the needs of the world of work, and, to a certain extent, the failure of our education systems at large.

By 2020, we expect that 36% of all jobs in the EU will require high-level qualifications. But today only 26% of the current workforce is educated at tertiary level. Even if it is true that the highly educated are also hit by the crisis, experience clearly shows that the highly skilled fare better than others.

So we must ensure that more of our young people reach tertiary education. This is the sense of the Europe 2020 target we have set.

Europe's economic strength lies in its brain-power: in its research and innovation, in its cutting-edge technology, and therefore in its ability to produce a well-trained, highly productive workforce.

Europe needs people with the knowledge and skills to drive smart, sustainable growth. But today, European companies cannot find enough of them because we don't produce enough of them.

But this is not only about quantity. We must also deliver on the quality of the acquired competences. We must make sure that our education systems are more relevant to the needs of the world of work. This means being able to anticipate the future skills needs, while helping institutions to adapt to the world around them. Without bringing into question the societal and cultural role of education, which remains its primary mission, I believe that our schools, colleges and universities should ensure the employability of their graduates.

In November last year, I launched 'Rethinking Education', a new strategy which touches every level of education: from compulsory school to higher education and vocational training. The most urgent challenge we face is that our education and training systems are falling short when it comes to equipping people with both basic skills – such as reading and writing – and transversal skills – such as civic participation, cultural awareness and expression, media literacy, digital and ICT competences, an entrepreneurial attitude, or proficiency in foreign languages.

Almost 20% of young Europeans do not have sufficient literacy skills. They join the 73 million European adults who have only a basic level of education. But the most damaging problem is early school leaving: one in six young Europeans leave school with few or no qualifications. Early school leavers are at high risk of becoming unemployed, of losing access to the labour market, which leads to poverty and social exclusion.

The only way to counter these trends is to improve the performance of Europe's education and training systems. Because if we are going to make a difference, we need to get the basics right.

This is precisely what we are trying to do under the Europe 2020 Strategy. The fact that education now plays a central role in the EU's growth strategy marks a significant change in policy-making. This is, for me, a true game-changer. We have recognised that, here too, the European Union can add value.

In a month's time, as part of the European Semester, our new economic governance framework, the Commission will present its draft Country-Specific Recommendations for 2013, which guide Member States in their reform efforts. Many of this year's recommendations will call for improvements in education and training.

But reforms alone are not enough. Good education comes at a price, and well-performing education and training institutions require proper funding. As we all know, the crisis has severely hit our public finances, and many countries have started reducing education budgets.

In 2011 and 2012, nine Member States cut education budgets by more than 5%. Eleven Member States cut between 1% and 5%.

This is a cause for real concern. Reducing investment in education and skills is counter-productive. In our 2012 Annual Growth Survey, the Commission urged Member States to give priority to education when they consolidate their public finances. I want to be clear: poor education is a cost that Europe today cannot afford.

Member States certainly have prime responsibility for reforming their education and training systems, but the EU supports many of their efforts. Let me just point out a few examples.

Digital skills are one of the key competences considered vital for full participation in the knowledge society. But 48% of Europeans aged 16 to 74 have low ICT skills. European companies are facing shortages at a time when we begin to feel the impact of demographic ageing on our labour market. Therefore, this year, I will launch a new initiative on making better use of digital technologies in education and training.

In September 2011, I presented an agenda for modernising higher education in Europe to help Member States adapt to these challenging times. One of the priorities is to improve the quality of teaching and learning.

This needs to be done in closer cooperation with stakeholders, and I have set up a High Level Group which will make specific recommendations this summer. We will certainly continue to encourage closer relations between universities and enterprise.

One sector deserves our full attention in this modernisation effort: vocational education and training. The contribution of good-quality apprenticeships to youth employment is widely recognised. It is not by chance that the Member States with the lowest youth unemployment rates are the ones with strong, attractive and well financed systems of vocational education and training. I firmly believe we need more efficient vocational systems right across Europe.

But this requires dual financing – public and private –and dual responsibilities. What we can observe in the high-performing countries is a strong commitment from companies. Therefore, in July this year, we will launch the European Alliance of Apprenticeships.

The new Alliance will bring together Member States, social partners, businesses, the European Commission and other relevant stakeholders. What unites us is a shared interest to develop and promote high-quality training through apprenticeships. I am determined to drive this agenda forward, and to use this year's Country Specific Recommendations to modernise vocational education and training.

Let me finish with a few words about our new Erasmus for All programme and the current budget negotiations. Erasmus for All is how the EU will contribute, politically and financially, to Europe's reform of education and training. Erasmus for All is also fully part of our strategy against youth unemployment, as it can help increase the employability of our young people.

A large part of the programme will continue funding mobility. This is where we, at European level, can really add value. And not just for students, but for school pupils, teachers, trainees, apprentices, youth workers and volunteers. We are, in a sense, democratising the access to Erasmus. We are also supporting students willing to take a full Masters' degree in another country by proposing a student loan guarantee facility.

In total, Erasmus for All will bring mobility to four million people between 2014 and 2020. This is vitally important because we know that learning mobility is often the gateway to labour mobility.

Mobility gives people a range of skills that help them to find better jobs. In that sense, the number-one objective of Erasmus for All is to raise the level of skills and sharpen their relevance for the labour market and society.

Erasmus for All will also propose more innovative approaches to prevent youth unemployment through structured partnerships between education and businesses. These are 'Knowledge Alliances' at the level of universities and 'Sector Skills Alliances' at the level of vocational institutions. These partnerships could also be expanded at national level through the Structural Funds.

Negotiations on Erasmus for All are now approaching a decisive phase. I believe the spirit is constructive, and I hope we can reach an agreement as soon as possible. However, I would like to bring to your attention two important points.

First is the need for flexibility. In a time of constantly changing needs, we need a programme which can adapt quickly to the political and economic realities.

Today for instance, our programme cannot respond as forcefully to youth unemployment as we would like, and this is because of inbuilt rigidities such as a budget that is largely pre-allocated, in advance, to the various sectors of education. Therefore, we propose that the new Erasmus for All offers greater flexibility around a set of clear and coherent objectives.

In contrast, the rapporteur proposes to increase the number of objectives and actions in the programme, and to pre-allocate 83% of the budget to the various beneficiaries. In other words, the status quo.

This brings us to the second issue: the name of the programme. I want to make clear that this is not a superficial matter but rather a question of principle. At stake is the entire simplification agenda at the heart of the proposals, where Erasmus for All unites seven existing programmes into an integrated, strategic whole.

If we agree on the need for a single programme with a clear political focus, then we must have a name that is credible and popular, and which symbolises the EU's most cherished ideals. In my eyes, 'Erasmus' is the only candidate. And if we are expanding our programme, and opening it up, then the name Erasmus for All sends a clear message.

I am convinced that if we do not exploit the full potential of simplification and one of the EU's best-loved brands, then we are making a mistake.

Finally, and this will be my last point, if we are to have an impact, and if we are to make a real difference for our youth, then we need to invest seriously in education at European level. Of course we welcome the allocation of six billion euros to the youth employment initiative proposed by the European Council. This will focus the support to young people in the regions that need it most, and will help to implement the youth guarantee scheme.

But, with a proposed budget of 17 billion euros for 'Erasmus for All' – and an increase of 63% on current funding – the Commission has clearly expressed its priorities. After the recent European Council agreement, we would now foresee a budget of around 14.5 billion euros, which still represents a significant increase on current funding.

These are difficult negotiations, but I hope I can count on the support of this Parliament in the final round of negotiations.

Thank you all for your attention. I now look forward to your comments and questions.